2.1- Growing the business

Question 1

Business growth

Answer 1

Process of a firm getting bigger

Question 2

2 general types of expansion

Answer 2

Internal/organic
External/inorganic

Question 3

Internal/organic ways to expand

Answer 3

-Entering new markets
-New locations
-Innovation: new products
-Technology: better machinery

Question 4

External/inorganic ways to expand
and definitions of them

Answer 4

Merger- two companies combine to one organisation
Takeover- one company taking control of another

Question 5

4 ways to see growth

Answer 5

Increase in sales/revenue
Increase no. of employees
Increase in outlets/locations
Increase in market share

Question 6

Benefits of innovation

Answer 6

Increase product range–>appeal to larger audience–> more revenue–>higher market share

Question 7

Benefits of entering new markets

Answer 7

Increase brand recognition–> higher global sales–> increase market dominance

Question 8

Benefits of new locations

Answer 8

More outlets–> increase customer convenience–> competitive ad–> customer loyalty

Question 9

Benefit of technology

Answer 9

More machinery–> increase productive capacity–> meet rising demand–> increase profit

Question 10

Advantages of organic growth

Answer 10

Less risk than external growth
Can be financed internally (retained profit)
Grows at sensible rate

Question 11

Disadvantages of organic growth

Answer 11

Dependant on overall market growth
Hard to increase market share if a leader alr
Slow growth, shareholders may prefer it to be rapid

Question 12

Advantages of inorganic growth

Answer 12

Higher revenue/ sales/ market share
Lower risk of failure
Global expansion

Question 13

Disadvantages of inorganic growth

Answer 13

Clash of cultures/ management styles
Poor communication as it grows
Differing objectives
Expensive

Question 14

PLC is?
4 key features

Answer 14

Public limited company
Largest type of business ownership
Listed on stock exchange
Anyone can buy shares
Shareholders have limited liability

Question 15

Advantages of PLC

Answer 15

Able to raise additional finance
Limited liability
Seen as more prestigious/reliable due to info available to public

Question 16

Disadvantages of PLC

Answer 16

More complex procedures
Risk of hostile takeovers
Increased media attention

Question 17

MNC is?
M definition?

Answer 17

Multinational corporation
Multinational- a business with operations in more than one country

Question 18

Advantages of MNC and analysis

Answer 18

Wider target market–> more consumers–> better sales–> better business success
Use cheap labour abroad–> in developing countries–> lower production costs–> capital spent elsewhere
Avoid protectionism–> could avoid restrictions on imports

Question 19

Disadvantages of MNC

Answer 19

Less focus on specific markets
Cultural and language differences

Question 20

2 types of internal finance

Answer 20

Selling assets, retained profit

Question 21

3 types of external finance

Answer 21

Share capital, loan capital, on stock exchange

Question 22

Selling assets
Ads & dis

Answer 22

Ad- helps business grow, raises finance
Dis- fewer assets could make it harder to borrow from banks

Question 23

Retained profits
Ads & dis

Answer 23

Ad- No interest
Dis- limited amount

Question 24

Issuing shares
Ads & dis

Answer 24

Ad- no interest
Dis- take share of profits

Question 25

Stock exchange Ads & dis

Answer 25

Ad- quick and cheap Dis- open to takeover

Question 26

How business aims and objectives change in response to technology?

Answer 26

Improving tech, innovation, aim to improve product range, minimise production costs

Question 27

How business aims and objectives change in response to market conditions?

Answer 27

Growing market, aims focusing on growth Market w increasing competition, aim to survive

Question 28

How business aims and objectives change in response to performance?

Answer 28

Look at places to improve Poor financial performance in previous year, aim to improve sales or revenue

Question 29

How business aims and objectives change in response to legislation?

Answer 29

Change in legislation, could increase costs, adapt aims to counteract this increase

Question 30

How business aims and objectives change in response to internal reasons?

Answer 30

Strategic decisions within a company e.g deciding to sell in another country, aim focusing on entering a new market

Question 31

International trade

Answer 31

Flow of goods and services between countries e.g. importing and exporting

Question 32

Import

Answer 32

A good brought into the country (money leaving UK)

Question 33

Export

Answer 33

A good sold to another country (money coming into UK)

Question 34

Globalisation

Answer 34

Increasing number of businesses that are operating on a national scale

Question 35

Benefits to a UK business of globalistion

Answer 35

-Greater number of customers to sell to in a new market -Lower cost of production in developing countries

Question 36

Drawbacks to a UK business of globalisation

Answer 36

-Threat from foreign businesses -Adapting products to meet foreign customer needs

Question 37

Barriers to international trade def?

Answer 37

A government imposing regulations to restrict flow of international products in its country

Question 38

3 main barriers to international trade 2 reasons for them?

Answer 38

Tariffs Quotas Export subsidy -Protect jobs in domestic industries -Increase tax revenue from tariffs

Question 39

Tariff Def? Ads? Dis?

Answer 39

Tax placed on an import to increase its price and decrease its demand Ads- more money for domestic gov; businesses in domestic country have less competition Dis- imported goods and services become more expensive; other countries may impose tariffs, affecting exports

Question 40

Trade blocs def?

Answer 40

Group of countries who make a trade agreement not to place tariffs

Question 41

Free trade def?

Answer 41

No restrictions to buying and selling between countries

Question 42

Benefits of using e-commerce to trade internationally

Answer 42

-Can translate websites, reach new geographical markets, sell in more countries -Don't need physical presence in the country, lowers start up costs

Question 43

Glocalisation

Answer 43

Adapting products to meet countries' cultural differences

Question 44

Ethics

Answer 44

Moral principles that guide the way a business behaves

Question 45

Being ethical Ads? Dis?

Answer 45

-Higher rev, increased customer purchases based on ethics -Easier to attract staff *Increased overhead costs, like training *Bad publicity if found to be unethical

Question 46

Trade-off

Answer 46

Finding a balance between achieving two objectives

Question 47

Marketing mix with being ethical

Answer 47

Product- more sustainable Price- increases price paid to small suppliers Place- sold close to production, less CO2 Promo- Accurate info on packaging

Question 48

Impacts of air, noise and plastic pollution from a business

Answer 48

-Businesses offering delivery increases traffic congestion -Can negatively affect health -Can damage ecosystems